Financial Management for State and Regionals : Best Practices for Busy Leaders

1. Financial Managementfor State and Regionals:Best Practices for Busy Leaders Ari Kaufman, Associate Registrar for Operations – Berklee College of Music Chair, AACRAO State & Regional Relations Committee Treasurer, NEACRAO (New England) April 14, 2013

2. The Reality of Managing the Finances of a State or Regional ACRAO • We have full-time jobs as Registrars, Admissions Officers and Enrollment Managers. • Board members are almost always spread out in different locations. • We are often friends with our fellow board members. Can we ask the hard questions? • There is often no instruction manual to tell us all the things we should be doing.

3. The Reality of Managing the Finances of a State and Regional ACRAO • It is often hard to find volunteers to serve the organization. • Budgets are limited. Thus robust software for membership tracking is not always possible. • State and Regional Presidents usually change from year to year. • Cash basis accounting (instead of accrual based) is how we usually record activity.

4. What “Must” We Be Doing? • Incorporation • Insurance • Receive invoices and pay them • Send invoices and deposit checks • Manage Bank Accounts • Prepare Financial Reports for Meetings • File Tax Forms

5. Incorporate ! Is your ACRAO Incorporated as a Nonprofit? Why is this crucial? • Board Members avoid personal liability • Tax exempt status Also… • Donations received are tax-exempt • Lower postage rates

6. Incorporate ! • Keep your incorporation documents up-to-date and in a safe place. Find out how often they need to be renewed. • Example: In Massachusetts, we need to file an annual renewal report each year which costs a small fee of $15.00

7. Insure your ACRAO Make sure you have general liability insurance to protect the assets of the organization against lawsuits due to such things as: • Injuries at conferences • Property Damage

8. Insurance Questions • How much insurance should you carry? • Are legal fees from a lawsuit covered? • Should you have special liquor liability insurance? • Other kinds of insurance?

9. Tax Forms Find out which of the three Tax Forms your organization should file annually: • Form 990N ( < $50,000 in gross receipts) • Form 990EZ ( < $200,000 in gross receipts and total assets < $500,000) • Form 990 ( >= $200,000 in gross receipts and total assets >= $500,000)

10. Filing Tax Returns • When is your ACRAO’s Fiscal Year End and when is your Annual Meeting ? • If necessary you can get a extension • Example: NEACRAO’s Fiscal Year End is June 30. Tax return is due on Nov 15. We ask for a 3 month extension so the tax return can be prepared

11. Using a Tax Accountant • Using a CPA or other qualified tax preparer is a good idea

12. Day to Day Bookkeeping and Treasurer Duties you Must Do…. • Pay outstanding invoices – keep copies of invoices • Deposit checks • Reconcile bank statements monthly and print out and keep copies of the reconciliations • Document business purpose for every check written • Update signers on your account each year • Safeguarding your assets (check book, credit cards)

13. Bookkeeping and Treasurer Duties that Should Be Done…. • Arrange for an periodic independent review • Audit Committee (good) • Independent Accountant (better) • How often should this be done? • Annually? • At least once during each Treasurer’s term

14. Using an Independent Accountant Agreed Upon Procedures • Can be tailor made to suit your organization • Procedures Could Include: • Reviewing a sample of cash disbursements • Reviewing your internal controls • Reviewing bank statements, reconciliations • Reviewing a sample of cash receipts

15. Using an Audit Committee • Members of the State or Regional would comprise this committee • Same objectives as using an independent accountant, but less professional expertise • How often should this independent review be done? • How do you find volunteers for this?

16. Audit Committee and Board • Asking the tough questions of your Treasurer can be interpersonally difficult • You don’t enjoy putting people on the spot at a board or annual meeting • What are some alternatives? • Getting the financials to board members ahead of time and questions back to Treasurer ahead of meeting

17. Bookkeeping and Treasurer Duties that Should Be Done…. • Follow-up with uncollected invoices (i.e. conference attendees that never sent in their checks.) • Make deposits in a timely fashion • Pay invoices / reimburse people within 30 days • Send new membership renewal letters before the end of the current fiscal year

18. Bookkeeping and Treasurer Duties that Should Be Done…. • Segregation of Duties • The person receiving cash should not be the person recording the transaction. Access to the bank statement should be available to more than one person • Two signatures for checks over a certain dollar amount • System to ensure same invoice doesn’t get paid twice • Minutes should be maintained • Backup copies of accounting files

19. Bookkeeping and Treasurer Duties that Could Be Done…. Budgeting • Preparing a Budget for the upcoming fiscal year • Approving a Budget • Reviewing underagesand overages • Why this is hard in a cash basis system • What is the risk of not doing budgeting

20. Bookkeeping and Treasurer Duties that Would Be Done If… Membership Work • Following up with each member that has not renewed their dues until a confirmed answer is received. Develop formal procedures to collect late dues. • Soliciting new members - colleges in your state or region that are not currently members

21. Questions?